It is impossible to imagine the development of new technologies with one hundred percent success. Investments in development require high costs, as does the process of releasing the final product into the hands of consumers. When billions of dollars invested in the launch of a project are at stake, different situations can happen that will destroy everything
It is impossible to imagine the development of new technologies with one hundred percent success. Investments in development require high costs, as does the process of releasing the final product into the hands of consumers. When billions of dollars invested in the launch of a project are at stake, different situations can happen that will destroy everything.
Sometimes external factors, such as weather and unstable market conditions, can disrupt the project. And in other cases, the incompetence of startup founders and the lack of due diligence of investors can destroy the product. Opportunities to get rich continue to exist as well as opportunities to instantly lose all your capital.
In this article we will talk about 12 cases when mistakes, deception and lack of necessary knowledge led to the loss of millions of dollars.
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Juicero
Juicero tried to meet the huge demand for fresh juices with a machine that produced fresh juice exclusively from Juicero packaging. An exclusive machine priced at $700 scanned the QR code on the package and pumped out freshly squeezed fruit juice for the consumer.
However, Bloomberg reporters published an article showing that with scissors you can do the same thing as this machine for $700. The reaction was swift and sales plummeted.
As soon as the public realized the deception, the company ceased operations, losing investors, including Google’s parent company Alphabet and basketball player Kobe Bryant. The company received investments worth more than $120 million. The damage from this deception was inflicted on customers who spent $700 on a Juicero dispenser.
- RMS Titanic
Built at the Belfast shipyards in the UK, RMS Titanic epitomized the best and latest shipbuilding technologies of its time. The Titanic has created a new era of ocean travel with living quarters and luxuries not previously available on ships. Shipbuilders proudly proclaimed the ship unsinkable.
However, the Titanic sank on the night of April 14-15, 1912 after a collision with an iceberg. Several mistakes and incorrect decisions of the captain contributed to the collision. In addition to the 1,517 dead, the financial costs for the owner of the White Star Lines ship were enormous. According to Investopedia estimates, the construction of the Titanic cost $7.5 million in 1912, which today is about $400 million.
- Quibi
Now on the Internet you can find a huge number of streaming services that allow you to watch any TV shows and movies. This includes Hulu, Netflix and Amazon Prime. We can single out another, but already non–existent service – Quibi.
Quibi streaming service was created by former Walt Disney Studios CEO and Dreamworks co-founder Jeffrey Katzenberg and Margaret Whitman, she headed HP and eBay. Quibi offered users to watch movies and TV series divided into short episodes. The creators decided to make it available only for mobile devices. This choice turned out to be a fatal mistake.
Famous Hollywood actors such as Idris Elba, Reese Witherspoon and Christoph Waltz were hired to promote Quibi, as well as producers and directors. The whole life of Quibi from beginning to end lasted 6 months. Katzenberg raised $1.75 billion before the launch. from the largest studios. However, the demand for the application turned out to be catastrophically small. The leaders of Quibi decided to close the project .
According to an article in The Wall Street Journal, consumers before Quibi could watch short videos on YouTube for free. Quibi made a bet that it would be able to charge for subscriptions, offering viewers high-quality content, and spent a lot on software development, but it didn’t work. According to Katzenberg, “the idea itself wasn’t strong enough.”
- Mariner I
The successful launch of the USSR satellite launched the space race, and the United States in response made every effort to explore space. One such effort was the research ship Mariner I, which went to study Venus in 1962. According to NASA, “the total cost of research, development, launch and support of Mariner series spacecraft (Mariners 1 to 10) amounted to approximately $554 million.” In modern money, this amount exceeds $ 5 billion. If the costs were evenly distributed among all 10 ships, Mariner-1 would cost $500 million.
The ship was supposed to fly past Venus and collect data about the planet. According to Electrical Design Magazine, the spacecraft began to veer off course due to an unplanned maneuver. Ground control sent the command to hang up just 293 seconds after the start of the flight.
During the flight check, NASA found a missing hyphen in the code that allowed sending incorrect guidance signals to the ship. NASA takes unsuccessful missions into account in its work, but failure due to a single code symbol can be perceived by some as a huge waste of taxpayers’ money. The second spacecraft was already prepared and launched within a few months after the failure of Mariner I and became the first successful mission to explore other planets.
- WeWork
WeWork rents out premises for startups and other companies. WeWork designs and creates physical and virtual spaces for collaboration, as well as provides office services for entrepreneurs and companies. The company’s problems were not related to the business model, but to the management.
According to Buzzfeed, WeWork has managed to attract ever-growing investments in the company to such an extent that its valuation has grown to $10 billion. despite the very low profit of the company, and maybe even losses. All the hype around investments reached its peak after the public offering of shares (IPO) in 2019.
In 2019, The Guardian published an article about the failure of the WeWork IPO. Within 6 weeks, the CEO resigned and gave up his shares, and the company passed to its largest shareholder Softbank. WeWork still exists, but with a more conservative and stable management team, and is no longer a technology leader surviving on advertising alone.
- The Morris Worm
The first networked computers created existed in universities, and most of their users were research students. This marked the beginning of the World Wide Web and the modern Internet. To find out how many users are connected to the network, MIT professor Robert Morris created a program that helped him track users. A randomly created program became the first computer virus that quickly multiplied, spread to other computers on the network and caused overload and failure of several systems.
The consequences made the growing world of computer users aware of the potential damage that could be caused by incorrect lines of code, and led to the first conviction under the Computer Fraud and Abuse Act of 1986.
Morris’s sentence was commuted because he had no malicious intentions, and the damage caused turned out to be an accident. However, troubleshooting required several hours of cleaning and restarting the systems. According to the FBI estimates, the damage ranged from $ 100 thousand to $ 10 million .
- Fisker Autmotive
Founded by talented car designer Henrik Fisker, responsible for the fashionable design of the Aston Martin V8 Vantage and BMW Z8, Fisker has built a luxury hybrid sports sedan called Karma. Despite the striking characteristics for that time, the owners quickly discovered flaws in the design. The Edmunds blog, as part of a review on Karma 2012, highlighted the big disadvantages: cramped rear space, blind spots, poor-quality materials and a very small trunk.
At a price over $100 thousand, it was difficult to attract buyers with such characteristics. Moreover, Consumer Reports magazine gave the car an unsatisfactory rating, and as a result, the company failed to meet its objectives.
Fisker closed in 2013, faced with the challenges and dangers of working in a niche market. Fisker has attracted many large investors, including the US government. As part of initiatives to stimulate the development of Fisker electric vehicles, the Obama administration has allocated up to $500 million. According to The Atlantic, the amount actually received was no more than $200 million, and the government reimbursed about 25% of this amount, but still $150 million of taxpayers were lost forever.
- Microsoft Zune
According to the Medium portal, the Microsoft Zune portable media player was a high-quality product with a pleasant interface. Its technical specifications were comparable to the iPod, and it worked the same way. However, Microsoft has failed in marketing and has targeted either too narrow an audience or the wrong group altogether. Bad timing probably also contributed to the decline of Zune, as it lagged behind its biggest competitor by 5 years.
According to Tech Crunch, in 2007 Microsoft’s profit decreased by 289 million due to slow sales of Zune. The cost of the device was reduced from the original price of $229 to $168. In 2011, the Zune ceased to exist.